Oil slides on recession fears over weak US economic data
Crude’s rally paused as it battled headwinds created by the weak statistics, which offset positive fundamentals, analyst says
06 April 2023 - 07:21
byKatya Golubkova and Muyu Xu
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Tokyo/Singapore — Oil fell on Thursday as weak US economic data raised concerns over a potential global recession and demand reduction, but benchmark prices were headed for a weekly advance after Opec+ announced further output cuts and US oil stocks dropped.
Brent crude futures fell 74c (R13.39), or 0.9%, to $84.25 a barrel by 5.44am. West Texas Intermediate US crude slid 73c, also 0.9%, to $79.88 a barrel.
Brent and WTI have both gained more than 5.5% so far this week, headed towards three consecutive weeks of increase, after Opec+ pledged voluntary production cuts.
“Crude oil’s rally paused as it battled the headwinds created by the weak economic data. This offset more positive fundamentals,” ANZ Research said in a note.
The US services sector slowed more than expected in March as demand cooled, while a measure of prices paid by services businesses fell to the lowest in nearly three years, giving the Federal Reserve a boost in the fight against inflation.
New Zealand’s central bank raised interest rates more than expected on Wednesday, and India is likely to be the next in line to step up its benchmark rates.
Meanwhile, US job openings in February dropped to their lowest in nearly two years, suggesting the labour market was cooling. The slew of soft economic data soured market sentiment, stoking fears of a recession and prompting investors to adopt risk aversion strategies.
The US dollar index strengthened on Thursday, rebounding from a recent two-month-low. A stronger greenback could dent oil demand as crude becomes more expensive for holders of other currencies.
“A slowdown in the US economic outlook is weighing on the upside on US oil prices, however we continue to expect a further uptick in oil prices to the end of the quarter,” Baden Moore and Adam Skelton, analysts from National Australia Bank, wrote in a note.
Underpinning the market, Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for a third consecutive month.
“This points to further strength in demand in the region,” ANZ Research said.
US crude inventories fell 3.7-million barrels last week, about 1.5-million barrels more than forecast, government data showed.
Petrol and distillate stocks also fell more than expected, drawing down by 4.1million barrels and 3.6-million barrels, respectively.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil slides on recession fears over weak US economic data
Crude’s rally paused as it battled headwinds created by the weak statistics, which offset positive fundamentals, analyst says
Tokyo/Singapore — Oil fell on Thursday as weak US economic data raised concerns over a potential global recession and demand reduction, but benchmark prices were headed for a weekly advance after Opec+ announced further output cuts and US oil stocks dropped.
Brent crude futures fell 74c (R13.39), or 0.9%, to $84.25 a barrel by 5.44am. West Texas Intermediate US crude slid 73c, also 0.9%, to $79.88 a barrel.
Brent and WTI have both gained more than 5.5% so far this week, headed towards three consecutive weeks of increase, after Opec+ pledged voluntary production cuts.
“Crude oil’s rally paused as it battled the headwinds created by the weak economic data. This offset more positive fundamentals,” ANZ Research said in a note.
The US services sector slowed more than expected in March as demand cooled, while a measure of prices paid by services businesses fell to the lowest in nearly three years, giving the Federal Reserve a boost in the fight against inflation.
New Zealand’s central bank raised interest rates more than expected on Wednesday, and India is likely to be the next in line to step up its benchmark rates.
Meanwhile, US job openings in February dropped to their lowest in nearly two years, suggesting the labour market was cooling. The slew of soft economic data soured market sentiment, stoking fears of a recession and prompting investors to adopt risk aversion strategies.
The US dollar index strengthened on Thursday, rebounding from a recent two-month-low. A stronger greenback could dent oil demand as crude becomes more expensive for holders of other currencies.
“A slowdown in the US economic outlook is weighing on the upside on US oil prices, however we continue to expect a further uptick in oil prices to the end of the quarter,” Baden Moore and Adam Skelton, analysts from National Australia Bank, wrote in a note.
Underpinning the market, Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for a third consecutive month.
“This points to further strength in demand in the region,” ANZ Research said.
US crude inventories fell 3.7-million barrels last week, about 1.5-million barrels more than forecast, government data showed.
Petrol and distillate stocks also fell more than expected, drawing down by 4.1million barrels and 3.6-million barrels, respectively.
Reuters
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